Another victory for Japan's governing Liberal Democratic Party. What's new? This time a lot. Japanese politics has changed forever.
This month's election was not just another victory for the LDP over the Democratic Party, its major contender. More important, it was also a victory for incumbent Prime Minister Junichiro Koizumi in his attempt to centralize power within his own party and unite the forces in favor of change. Call it the UK-ization of Japan.
Whether voters intended it or not, Koizumi's landslide victory means that the dice have been cast in favor of a British-style parliamentary system that centralizes power in the hands of the prime minister. The election results promise to transform Japan and its relations with the rest of the world.
Four years ago, Koizumi bid for the presidency of the governing Liberal Democrats by vowing to "destroy the LDP." In his post-election interview, Koizumi boasted that "the old LDP was destroyed and a new party emerged." He is right. He effectively rendered the old protectionist wing of the LDP powerless, by simply refusing to let it to run for office under the LDP banner. Instead, he nominated a whole crop of first-time candidates to run.
More than a quarter of the LDP candidates elected this month are new faces. Nothing like this has ever happened before. In the past, LDP prime ministers never controlled the party nomination. From now on, the LDP will be more like the British political parties. The Democratic Party will have to follow the suit.
The days of weak leaders are over in Japan. With or without Koizumi, the change in leadership style is here to stay. Japan introduced a number of important institutional reforms in the 1990s, including a change in the electoral rules in 1994, and the strengthening of the cabinet and the prime ministerial office in the late 1990s.
All these changes were designed to turn Japan in-to a British-style parliamentary democracy. Koizumi is a product of this new political structure. He was the first to understand how the new political rules of the game worked. Under them, individual politicians cannot survive by bucking party leaders. Koizumi's victory has taught ambitious politicians the need to rally behind a strong leader. There is no going back.
What will happen now? In the short run, there will be bolder policy shifts. Postal privatization is just the first step. We can expect Japan to address its multiple challenges.
Japan is experiencing an unprecedented degree of demographic aging. By 2025, nearly a third of the population will be above 65. In the United States, in contrast, less than one-fifth of the population will be older than 65. Japan also has one of the worst fiscal deficits among the industrialized countries. Major reforms to address these issues are finally on the agenda. The most likely scenario is a reduction in benefits for the elderly as resources shift toward the active working population.
Tax increases will most likely take two forms. One is a moderate hike in the consumption tax rate coupled with a social security reform that increases the government's commitment to a basic social minimum. The other is elimination of existing tax loopholes.
Internationally, Japan has to redefine its role in the world. Japan's so-called Peace Constitution has prevented the country from deploying its troops abroad for military purposes. Koizumi wants to change Article 9 of the Constitution in order to legitimate the Self Defense Forces as a "military" and to facilitate future deployments outside Japanese territories.
With only one year of his term remaining, Koizumi may not deliver all these reforms himself. But the "new party" that he brought to power is likely to carry forward this agenda.
The end result is likely to be a Japan that looks very much like Britain both domestically and internationally. Japan will develop a more pro-market face and be ready to take on a more active role in the U.S. global security strategy.
American business and policy makers will certainly find the new Japan easier to understand and to deal with. Whether a country like China will welcome the change is another issue.